Massive shift in the age group of consumers applying for debt review in South Africa

South African consumers may see little relief from the petrol price decrease, as the savings are offset by increasing electricity and rates tariffs.

The Department of Transport has announced that petrol is set to decline by 95 cents and 96 cents per litre for 95 and 93 grades, respectively on Wednesday (3 July).

Diesel will come down by 75 cents and 76 cents per litre for 0.05% sulphur content and 0.005% sulphur content, respectively.

The price of 95 petrol will fall by 95 cents a litre and 93 octane by 96 cents a litre on Wednesday (3 July).

However, increased electricity tariffs are expected to near fully offset these concessions, said Efficient Group chief economist Dawie Roodt.

He further cautioned that these price reductions should not give consumers a false sense of security.

“The South African economy remains deeply stressed and consumers are still in a lot of trouble with unemployment looming large on the horizon for many consumers,” he said.

“The reality is that although most commuters will save between R40 and R50 a tank when they fill up with petrol, these price reductions are going to be neutralised by substantial price increases of all goods and services in the coming months.

“There is absolutely no room for celebration because the economy remains deeply stressed and things are going to get a lot worse before they get better.”

Young people in South Africa hit hard

Neil Roets, CEO of one of South Africa’s largest debt counselling companies, Debt Rescue, said the petrol price decrease could have been substantially greater had it not been for the collapse of the rand earlier in June when Ace Magashule launched his attack on the Reserve Bank.

Roets said the overall financial situation that consumers were in now was probably the worst since 1994 when the first democratic elections took place.

“Most consumers have cut out luxuries from their spending some time ago and will now have to start cutting back on basic necessities just to stay alive,” Roets said.

The debt expert said that nearly half of young people below the age of 35 were unemployed, and this presented a huge problem for the country.

There was little to no chance that the sluggish economic growth of below 1% would provide jobs for the millions of unemployed people, he said.

Roets said it was also painfully evident from the rapid growth of Debt Rescue that a growing number of consumers were falling behind in debt repayments and resorting to the process of legal debt review.

“We are seeing daily records being set by the number of distressed consumers who are knocking on our door to be placed under debt review.

“The latest Debt Rescue client statistics comparing the first quarter of 2018 with the same period for 2019 showed that there had been a significant shift in the age group of consumers applying for debt review,” he said.

Where the 21-30 age group previously made up 20% of all applicants in Q1 2018, it increased to 29% in Q1 2019, he said.

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Massive shift in the age group of consumers applying for debt review in South Africa